Important Year-End Financial Moves to Make Before December 31

Warren Buffett once wrote that your investments don’t know they’ve circled the sun for one more year — but your tax plan certainly does. As the calendar winds down, year-end financial planning becomes essential for minimizing taxes, avoiding surprise tax bills, making smart charitable gifts, and ensuring your retirement contributions and portfolio structure are exactly where you want them.

The next few weeks offer one of the most valuable planning windows of the year, and here are the key moves to make before December 31st.

Year-End Financial Planning: Key Moves Before December 31

Capital Gains Distributions: Avoid Surprises

If you own mutual funds in a taxable account, now is the time to check on expected year-end capital gains distributions. These distributions happen when the fund realizes gains during the year — and they’re passed along to you whether or not you sold anything. That can lead to surprise tax bills, especially if you recently bought into a fund that had embedded gains from which you didn’t benefit.

Capital gains distributions aren’t necessarily “bad” — reinvested gains increase your cost basis — but they are worth planning around. Here’s what to do:

1. Check your fund company’s site for estimated distribution amounts and record dates.
2. Decide whether the expected distributions fit into your tax picture. Options include:
   • Do nothing if the tax hit is manageable or the other options aren’t palatable
   • Sell the position before the record date if your gains are long-term and modest
   • Harvest losses elsewhere to offset the distribution
   • Donate appreciated shares of the “offender” — more on this below

Donating Appreciated Securities: A Powerful Year-End Strategy

You have until year-end to make deductible charitable gifts. One of the most effective approaches is donating appreciated securities — especially this year. Here’s why:

Markets are up

We’re now over three years into a bull market, and after another strong year, many portfolios are sitting on meaningful winners. Donating appreciated securities that you’ve owned for more than a year lets you:

• Avoid paying capital gains tax
• Take a deduction for the full market value

For example, if you bought an ETF for $10,000 that is now worth $20,000, you’ve got a $10,000 gain. In the top bracket, selling would trigger roughly $2,380 in federal tax — but donating the shares avoids that tax and gives you a $7,400 deduction. The combined benefit is nearly half the gift’s value, not even counting state tax.

OBBA makes this a special charitable-planning year

Next year, The One Big Beautiful Bill Act (OBBA) will reduce charitable tax benefits for high-income households. Two big changes:

• The top charitable deduction rate drops from 37% → 35%
• Itemized charitable deductions only count above 0.5% of AGI

So, if you plan to give over the next few years, consider front-loading into a Donor Advised Fund now. You lock in 2025’s rules while still giving to charities at your own pace later.

Asset Location: Make Your Portfolio More Tax-Efficient

Year-end is also a good time to check where you hold your investments. Asset location — placing your investments in the optimal account type to reduce taxes — can materially improve after-tax returns.

As a rule of thumb:

• Retirement accounts: best for tax-inefficient assets (bond funds, high-turnover stock funds)
• Taxable accounts: best for tax-efficient investments (municipal bonds, low-turnover stock strategies)

If you see mismatches, don’t trigger large gains to fix them — instead, use new contributions, rebalancing, or future cash flows to gradually improve tax efficiency. Also, year-end is a great time to talk with your advisor about if direct indexing fits your situation.

Retirement Plan Contributions: Make Sure You Maxed Out

Pull up a recent paystub to confirm you’re on track to contribute what you intended to your workplace plan.

The maximum contribution limits in 2025 are:

• $23,500 employee contribution limit
• +$7,500 catch-up for ages 50–59 and 64+
• +$11,250 catch-up for ages 60–63

If you planned on maxing out, make sure you’re on track and aren’t missing any catch-up eligibility.

Bonus: Review Your Credit Cards

One last non-tax item that consistently saves people real money: review your credit card statements.

Recurring subscriptions, duplicate charges, unused services, charge errors — they sneak in easily. A quick audit now can uncover things worth fixing.

Conclusion

Year-end financial planning doesn’t need to be complicated, but it does require intention. A few thoughtful steps now—reviewing capital gains distributions, making tax-smart charitable gifts, tightening up your portfolio’s asset location, confirming retirement contributions, and cleaning up recurring expenses—can meaningfully improve your financial position heading into next year. By taking advantage of this short window before December 31, you set yourself up for stronger after-tax returns, fewer surprises, and a financial plan that stays aligned with your long-term goals.